You may remember that Kentucky lawyers Melbourne Mills, Jr., Shirley A. Cunningham, Jr., and William J. Gallion, who were accused of taking an extra $65 million from the settlements of 440 clients they represented in Fen-Phen litigation, were scheduled to go on trial last year.
Last summer, a federal jury acquitted Mills, but could not reach a verdict regarding Cunningham or Gallion, after deliberating for eight days, causing U. S. District Judge William O. Bertelsman to declare a mistrial.
But earlier this month, following two days of deliberations, a jury found Gallion and Cunningham guilty of one count of conspiracy and eight counts of wire fraud. A few days later, the jury ordered the defendants to forfeit $30 million, as well as an unspecified amount in another account, which could be as much as $20 million. They will be sentenced on July 27 and their lawyers have said they will appeal the verdicts.
As described by Andrew Wolfson in the (Louisville) Courier-Journal, this trial was different from the first one, not including the outcome. District Judge Danny Reeves presided over this trial, after Judge Bertelsman recused himself after last year’s mistrial. And because Judge Reeves sits in Frankfort, the trial was moved there from Covington. But perhaps the most significant difference was that the defendants faced nine counts instead of one, following the prosecution’s decision to issue a superseding indictment after last summer’s mistrial.
According to the Kentucky Law Review, last October, the Kentucky Supreme Court permanently disbarred Gallion and Cunningham after they admitted to committing eight of the 22 ethical violations alleged against them.
The defendants’ disbarments may have been significant to the jury. Angela Ford, who represents the Fen-Phen clients in a civil action against Gallion, Cunningham, and Mills, said that the key difference in the retrial was that the Kentucky Bar Association’s chief counsel was permitted to testify about the Supreme Court’s disbarment order and the Bar’s investigation.
Ford’s clients have already obtained a $42.5 million verdict in a civil action against Gallion, Cunningham, and Mills.
But still unclear is the status of some horses owned in whole or in part by Midnight Cry Stable, which is owned by Tandy LLC, a corporation in which Gallion and Cunningham are principals. Midnight Cry still owns 20% of Curlin, a two-time Horse of the Year and, with earnings of $10,501,800, the leading North American-based money-winner of all time. As of last November, a Thoroughbred industry expert estimated that Midnight Cry’s interest was worth $4 million. Curlin has been retired and stands at stud at Lane’s End Farm for a fee of $75,000, and is expected to cover 125 to 130 mares this season, which would generate nearly $10 million.
Midnight Cry also owns Einstein, who won the Santa Anita Handicap on March 7, and whose share of the purse, $480,000, had been garnished by Ford’s clients. Last week, Franklin County (Kentucky) Circuit Court Judge Roger Crittenden ordered that the lien be released and the money, which had been escrowed, be released to a receiver for Midnight Cry, after its lawyer claimed that the money was necessary to care for other horses owned by the stable.